Consistent lower natural gas prices resulting from the boom in shale production are expected to fuel a major increase in industrial demand over the coming years. RBN expects that sector’s demand to increase by 5 Bcf/d from 19 Bcf/d in 2013 to 24 Bcf/d in 2025. There have been numerous announcements of new plant builds and expanded capacity projects in primary industries. Less well documented are the wider ramifications of abundant shale natural gas and natural gas liquids (NGL) supplies for US manufacturing industry as a whole. Today in the first of a two part series Taylor Robinson from PLG Consulting outlines the changes underpinning a new industrial renaissance.
The convergence of hydraulic fracturing and horizontal drilling to harvest crude oil and natural gas from US shale deposits over the past 7 years is at the core of the US energy revolution. The sharp increase in crude oil production has resulted in tremendous benefits for the US – reducing foreign oil imports, creating jobs and bringing wealth back to the US. Many people are less aware of the larger and more far-reaching impact that the plethora of natural gas produced by “fracking” is currently having on our industrial economy and the eventual boost to our manufacturing competitiveness that will result. The shale gas to manufacturing story ties together many of the themes discussed on a daily basis in RBN blogs to paint a hopeful picture for a portion of the US economy that has been declining for several decades.
The US shale gas boom took off in the 2007 timeframe with dramatically increasing supply causing a precipitous price drop between 2008 and 2012 from close to $10/MMBtu to a new standard of $3-4/MMBtu over the past few years, up until the polar vortex prices of this winter (which are expected to subside in the coming months). At the start of the boom, there were around 1,000 rigs specifically drilling for natural gas (“dry gas”) in the US. However, the greatly reduced pricing in 2009 made it difficult for drillers to cover their costs on dry gas wells, so they shifted their target to “liquids” (crude and natural gas liquids “NGLs”) and the new norm is about 300 dry gas rigs. But despite the sharply lower dry gas rig count US natural gas production continued to increase at a healthy rate (see black arrows in Figure 1). As we explained in our recent series “Golden Years: The Golden Age of US Natural Gas” improved rig productivity, associated gas from liquids drilling and new production delayed by infrastructure build out have kept production growing despite lower rig counts.
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About the song
“You say you want a revolution” is the opening line in The Beatles’ landmark 1968 song, “Revolution.” The song was written by John Lennon and credited to Lennon and Paul McCartney. Two different versions of the tune were recorded at EMI Studios in London during July 1968. The slower, blues-y version appears on The White Album, and the faster version showed up as the B-side of "Hey Jude" — released in August 1968; it was the first single released on The Beatles' new record label, Apple. “Revolution” was produced by George Martin. John Lennon and George Harrison's unique fuzz-laden guitar sound for the song was produced by running the guitars through an over-driven tube microphone pre-amp before the signal hit the mixing console.
"Hey Jude," backed with “Revolution,” went to #1 on the Billboard Hot 100, and sold over 4 million copies. “Revolution” would become the first Beatles recording to be licensed for a television commercial, appearing in a Nike ad in 1987. The three surviving members of the band did not approve of this and sued Nike, resulting in an out-of-court settlement in their favor in 1989. Personnel on the song were: John Lennon (lead vocal and electric guitar), Paul McCartney (bass and backing vocals), George Harrison (electric guitar), Ringo Starr (drums), and Nicky Hopkins (electric piano). All of The Beatles provided hand claps on the tune.
The White Album was a double LP, and was released in November 1968. Most of the songs for the record were written during a two-month Transcendental Meditation retreat in India in the early spring of 1968 that the whole group attended. In May of that year the group convened in London at EMI Studios with George Martin to start work on their next album. The sessions were fraught with disharmony and arguments over creative differences. Lennon has commented that "the break-up of The Beatles can be heard on this album." The double album went to #1 on the Billboard Top 200 Albums chart; it returned to the Top 10 in the Billboard 200 upon the release of a 50th anniversary re-issue in November 2018.
